Calgary’s Vero Solutions was one of 10 firms worldwide and the only Canadian company to earn the right to make a pitch to investors recently when CEMEX Ventures announced its annual 10 Most Promising Construction Startups.
Vero was launched just last summer by four veteran construction executives and within a year it has already created a viable business model based on a patent-pending steel and concrete modular construction system suitable for multi-use highrises. Two builds in San Diego are imminent, said Vero president Darrell Nimchuk recently, with others in Edmonton, Victoria and Toronto also on the horizon.
The CEMEX competition attracted 550 applicants. Nimchuk and Vero’s vice-president of operations Darrin Newnham attended CEMEX’s pitch event in Monterrey, Mexico, spending July 16 to 18 at meetings, rehearsing and finally making their pitch with the other CEMEX winners followed by a networking event with investors.
Vero’s pitch lasted only 13 minutes including questions.
“It was a cool experience to be involved in that, to sit in a room with money guys and pitch your story, it was great,” said Nimchuk, who noted he has made presentations to investors before but usually it’s one on one.
“To be selected out of candidates from 71 countries that were in the contest and to represent Canada, that was cool for sure.”
There were serious investment players in attendance, Nimchuk noted, including Darren Betchel, founder of Brick and Mortar Ventures and a member of the renowned Betchel family.
“The challenge is, how do I convince a person in the audience to invest in our company,” he said. “Based on our technology, you have to explain it a bit.
“I think we put a good pitch forward. It was a good experience.”
Vero’s info sheet says the firm uses shared patented (and patent pending) technology to reduce the cost of high rise buildings by 20 to 30 per cent and cut on-site construction time by 30 to 50 per cent. The cost estimates come from a real-life project – a 44-storey pilot build coming together in San Diego with three partners including an architect, an engineering firm and a developer, Capexco.
The deal came together swiftly, Nimchuk said. Last September Vero started talking to Capexco to figure out how to apply its modular process to the high rise market, and the Canadians took away the developer’s mixed-use floorplate to analyze it. By November Vero’s engineering team under Newnham had figured out the modularization.
The next phase involved pricing the processes, including talking to unions to determine how much it would cost to create and bring a module to within 90 per cent readiness for installation. In the new year Vero was comparing its rates to stick building.
To build conventionally in San Diego, the firm determined, it costs $325 to $535 per square foot. The Vero building came in just over $200 per square foot.
A key to the process is the fabrication of modules that are load bearing.
“Our modules act as shoring material, as rebar, as formwork, same as the construction process,” Nimchuk said.
The modules can be shipped to a building site with carpets installed and cupboards on the walls. What remains is connecting the modules to the core and installing the mechanical systems such as electrical, HVAC and plumbing.
Vero originally contemplated building its own modular plant, and it still might at a future stage, but the team’s thinking now is that it will work with established local modularization plants. Vero will charge developers for use of its modularization IP (intellectual property) and for its consulting services including modularizing plans and quality assurance.
“The benefits of our technology do not reside in the manufacturing of our modules, it is in the whole system or processes that works together,” Nimchuk explained. “The patented system is how everything ties together and works together.”
Vero by now has secured a third party engineer who has signed off on the technology.
By Aug. 1, Nimchuk said, Vero will have produced shop drawings for Capexco, and it will proceed to locate a modular manufacturer in the region that can do the fabrication. Shovels ought to be in the ground next April.
“We are fortunate,” said Nimchuk. “We fast-tracked this. It is a bit of luck and a bit of our network and a bit of good timing for it to come to fruition. We had the pilot project put on our lap, we were able to use it to hone our technology.”
Now there is major word of mouth happening across the continent, he said. The potential Toronto partner is based in the U.S. Nimchuk said a deal could firm up within a year.
“I know modular construction will work in Toronto today,” said Nimchuk. “The Toronto and Ontario marketplace makes absolute sense because it is so robust.”